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Application of Consumer Behaviour
Table of Contents
Executive Summary
Technique Overview..
Qantas Marketing Mix.
Product:
Consumer Behavior Theories.
Importance of Consumer Behaviour to business Marketers.
Importance of Consumer Behaviour to Marketers.
Conclusion on consumer behaviour
references/ Appendices
Executive Summary of Virgin and Qantas Airlines in Crisis
Marketing is an organizational function and a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization. It is an integrated process through which companies build strong customer relationships and create value for their customers and for themselves. On the other hand Consumer behavior is the study of when, why, how, and where people do or do not buy a product. It blends elements from psychology, sociology, social anthropology and economics. It attempts to understand the buyer decision making process, both individually and in groups .Customer behavior study is based on consumer buying behavior, with the customer playing the three distinct roles of user, payer and buyer.
Introduction to Virgin and Qantas Airlines in Crisis
Definitions
Consumer behaviour is the study of how individual customers, groups or organizations select, buy, use, and dispose ideas, goods, and services to satisfy their needs and wants. It refers to the actions of the consumers in the marketplace and the underlying motives for those actions.
Marketers expect that by understanding what causes the consumers to buy particular goods and services, they will be able to determine—which products are needed in the marketplace, which are obsolete, and how best to present the goods to the consumers. (Solomon, 2006)
The study of consumer behaviour formally investigates individual qualities such as demographics, personality lifestyles, and behavioural variables (such as usage rates, usage occasion, loyalty, brand advocacy, and willingness to provide referrals), in an attempt to understand people's wants and consumption. Also investigated are the influences on the consumer, from groups such as family, friends, sports, and reference groups, to society in general, including brand-influencers and opinion leaders (Noel, 2009)
Technique Overview
Consumer behaviour is the study of how individuals, groups and organizations select, buy, use and dispose of goods, services, ideas, or experiences to satisfy their needs and wants ( Kotler and Keller, 2006). Studying consumers provides clues for improving or introducing products or services, setting prices, devising channels, crafting messages, and developing other marketing activities .
Consumerbehaviour is a systematic process relating to buying decisions of the customers. The buying process consists of the following steps;
- Need identification to buy the product .
- Information search relating to the product.
- Listing of alternative brands.
- Evaluating the alternative (cost-benefit analysis)
- Purchase decision.
- Post-purchase evaluation by the marketer(Tyagi and Kumar, 2004)
Case Study on Qatnas Airline Industry
Qantas Airways Limited is the flag carrier of Australia and its largest airline by fleet size, international flights and international destinations(BBC News ,2014) . It is the third oldest airline in the world, after KLM and Avianca , having been founded in November 1920 it began international passenger flights in May 1935. The Qantas name comes from "QANTAS", an acronym for its original name, "Queensland and Northern Territory Aerial Services", and it is nicknamed "The Flying Kangaroo". Qantas is a founding member of the One world airline alliance (Butler, Ben , 2020).
The paper "Consumer Behavior Analysis of Qantas Airline " is a good example of a marketing case study .The Australian airline has experienced remarkable growth over the last few decades despite the economic volatilities rising cost of fuel. In 2012,the Australian airline market was estimated at $22billon and is projected to reach $22.1 billion by the end of 2016 .The growth of the industry has made the industry attractive to both domestic and foreign airlines that have entered to grab a share of the market (Qantas Airways Limited, 2016).
Qantas is the largest airline in the Australia in terms of fleet size ,international destinations and international flights .Founded in 1920 .Qantas has grown to become a globe brand flight in more than 20 domestic destinations and more than 21 international destinations across 14 countries . This implies that Qantas occupies position one in the Australian domestic airline industry despite high competition it faces from both domestic and international airlines . In terms of market share , Qantas controls 65% of the Australian domestic airline market share ( The Australian , 2015).
Qantas main product include the provision of passenger and cargo services to different destinations across the globe.
The airline has been able to attract a large number of customers that have remained loyal to the company because of the products and services provided by Qantas are of high quality besides the fact that the airline assures passengers of their safety and the safety of their cargoes .in 2015 ,Qantas carried more than 49.2 million passengers to different destinations across the globe. Besides the main products that the airline provides ,to increase customer value and experience ,Qantas provide additional services to passengers that fly with its fleet of aircraft that include in flight entertainment ,smart phone support and meals .product life cycle every product goes through different stages commonly called the product life cycle .A product goes through five main stages namely product development ,introduction ,growth ,and maturity and decline stage .analysis of the Qantas product life cycle indicates that its domestic flight services within Australian are at the maturity stage (Eric k ,2014).
The airline 's domestic flight services have reached the peak of their demand due to continued usage and customer satisfaction .however, analysis of the industry indicates the maturity stage is expected to continue into the future considering that airline is still at the maturity stage ,the airline ;s paper ticket product is at its decline stage .the airline industry happens to be among the industries that have been affected by the technological advancements that have occurred in the recent past .
Accordingly, as new technologies continue to be adopted ,such as the internet the need for a paper ticket to board an airline has declined significantly. as such ,to respond effectively to the technological trends in the market ,Qantas will not continue offering paper ticketing services by redesigning or improving it ,thus would be obsolete .Product positioning Qantas has positioned its products and services as the best airline service provider with a focus safety ,customer service and operational excellence .
Positioning itself in this manner has given it an edge over rivals as it makes the airline to be seen by passengers as the best in terms of guaranteeing the safety ,quality customers service and operational excellence.
Qantas Marketing Mix
Product:
With an increasing competitiveness in the airline industry Qantas pays immense importance to product planning. Products are crafted to attract new customers and hold on to the current ones. Profitability is held at a very high priority. The products of Qantas include either passenger travelling accommodations in their airlines or freight containers.
Basically, Qantas offers premium travelling arrangements. A range of flying arrangements is offered by Qantas. First class, international business class, international economy, premium economy. Various kinds of seating arrangements, in flight services, meals and amenities are provided in each class. Domestic flights have separate business and economy classes, with separate in-flight passenger entertainment services ( Kakkor P ,1976).
Jetstar provides low cost flying arrangements
Qantas always tries to augment its products with better services. Flight information is available online or received from the company via SMS.
The company tries to add up sophisticated and more advanced aircrafts to its fleet at regular intervals. In-flight entertainment has been given a boost with more investments in them.
Provides its customers with best connecting flights around the world.
It conducts one of the most popular frequent flyer programs in the world.
One of the topmost industry brand names, used for attracting millions of passengers. The company history, logo and slogan distinguish it from its industry rivals.
Better tracking systems for Qantas Freight.
Better connecting flight, safer containers, one of the quickest routes through the world are offered.
There are four main applications of consumer behavior:
- Analysing Market Opportunity
Consumer behaviour study helps in identifying the unfulfilled needs and wants of consumers.
This requires examining the trends and conditions operating in the marketplace, consumers' lifestyles, income levels and emerging influences.
The trend towards increasing number of dual income households and greater emphasis on convenience and leisure have led to emerging needs for household gadgets such as washing machine, mixer grinder, vacuum cleaner and childcare centres etc.
Mosquito repellents have been marketed in response to a genuine and unfulfilled consumer-need.
- Selecting Target Market :
A review of market opportunities often helps in identifying distinct consumer segments with very distinct and unique wants and need.
Identifying these groups, learning how they behave and how they make purchase decisions enables the marketer to design and market products or services particularly suited to their wants and needs.
- Marketing Mix :
Once unsatisfied needs and wants are identified, the marketer has to determine the right mix of product, price, distribution and promotion. Here too, consumer behaviour study is very helpful in finding answers to many perplexing questions.
- Use in Social and Non-Profits Marketing :
Consumer behaviour studies are useful to design marketing strategies by social, governmental an not-for-profit organisations to make their programmes such as family planning, awareness about AIDS, crime against women, safe driving, environmental concerns and other more effective.
UNICEF (greeting cards), Red Cross and CRY etc. make use of consumer behaviour understanding to sell their services and products and also try to motivate people to support these institutions (David Marsden ,2001).
Consumer Behavior Theories
There are five main schools of thought regarding consumer behavior:
1. Psychoanalytic Theory
This theory states that consumers make purchasing decisions based on their feelings, hopes, aspirations, and fears. For example, if someone aspires to be a singer they're likely to purchase voice lessons or music recording software.
2. Veblenian Social-Psychological Theory
This model asserts that humans are social creatures and make purchases based on societal and cultural norms. For example, as gluten-free, vegetarian, and vegan options are becoming more prevalent in society, consumers are becoming more likely to purchase those options from restaurants.
3. Reasoned Action Theory
This is the theory that consumers make purchases when they expect a specific result. That's why marketers need to associate a positive result with purchasing their product. For example, marketers for a personal trainer associate overall health and weight loss with their workout program.
4. Maslow's Motivation-Need Theory
Maslow, a psychologist in the 1950s, created a needs-based hierarchy that explains why people make purchases. The hierarchy asserts that people buy things to fulfill needs: psychological (survival), safety, love, esteem, and self-actualization. For example, people buy alarm systems for their homes because they value and need safety.
5. Hawkins Stern Impulse Buying Theory
Although there are many reasons people buy things, sometimes very little thought goes into it. Impulse purchases occur when people buy products based on external stimuli. For example, if people see a candy bar in the checkout line, they might purchase it just because it's there (Clemons E ,2008).
For all these theories, creating a buyer persona will help you better understand your customer's motivations.
Importance of Consumer Behaviour to Business Marketers
The main purpose behind marketing a product is to satisfy demands and wants of the Consumers. Study of consumer behaviour helps to achieve this purpose. As consumers are the most important person for marketer or sales person, therefore it is important for them to consider the likes and dislikes the consumers so that they can provide them with the goods and services accordingly (Solomon, 2009). The more careful analysis helps in more exact prediction about the behaviour of consumers of any product or services. The study of consumer behaviours helps business manager, sales person and marketers in the following way.
- To design the best possible product or service that fully satisfies consumer’s needs and demands.
- To decide where the service or product would be made available for easy access of consumers.
- To decide the price at which the consumers would be ready to buy that product or service.
- To find out the best method of promotion that will prove to be effective to attract customers to buy a product.
- To understand why, when, how, what and other factors that influence buying decision of the consumers.
Importance of Consumer Behaviour to Marketers
It is important for marketers to study consumer behaviour. It is important for them to know consumers as individual or groups opt for, purchase, consumer or dispose products and services and how they share their experience to satisfy their wants or needs (Solomon, 2009). This helps marketers to investigate and understand the way in which consumers behave so that they can position their products to specific group of people or targeted individuals.
In regard to the marketer’s view point, they assume that the basic purpose of marketing is to sell goods and services to more people so that more profit could be made. This principle of making profits is heavily applied by almost all marketers. Earlier, the marketers were successful in accomplishing their purpose. However, today, as the consumers are more aware about the use of product and other information of the product, it is not easy to sell or attract customer to buy the product (Kumar, 2004). Thus, in order to sell a product or service or to convince consumers to buy product, the marketers have to undergo through proper research to win them over.
The following are some of the points discussed that explains the value to marketers of understanding and applying consumer Behaviour concepts and theories.
- To understand Buying Behaviour of consumers
- To create and retain customers though online stores
- To Understand the factors influencing Consumer’s buying Behaviour
- To understand the consumer’s decision to dispose a product or services
- To increase the knowledge of sales person influence consumer to buy product
- To help marketers to sale of product and create focused marketing strategies
. These factors are discussed as follows:
Consumer’s rational behaviour: It is foremost important for a marketer to understand the situations where consumers behave rationally. Many consumer behaviour theories suggest that the consumers want to get maximum benefit and satisfaction from the product by spending minimum amount of money. This shows that consumers do not spend all their money to buy a product and keeps a certain amount of money as their savings.
Consumer’s taste and preferences: Understanding consumer taste and preferences helps marketers to revamp their product so that they could meet customer satisfaction. These factors may change from time to time. The change in consumer’s behaviour affecting by these factors should be carefully monitored. The marketers need carefully understand the consumer’s interest in the products by breaking down the targeted consumers into demographics, like age, occupation and location as they contribute investigating information about consumer preferences.
Price of Products: Prices of products are a widely discussed factor in consumer behavior theories. The theories suggest that marketers should keep their prices low without affecting the quality to attract consumers. This is because consumers go mostly for products that are of low price but satisfies their demand.
Features of Product: Increased number of features offered by the product tends to increase the price of products. In such case, consumers go for added features in a product at affordable price. Therefore, the markers design their products in such a way that the product gives maximum value or features to consumers at affordable price (Gilly, Mary C,Gelb, Betsy D ,1982)
Consumer’s knowledge about a product: The marketer must know to what extent the consumers have knowledge about a product. Mostly, consumers select products with which they are familiar with. For example, if the consumers are aware of the health effects of eating high fat food or fast food, marketing of such a product to health conscious consumer will end up in failure.
Conculsion on Virgin and Qantas Airlines in Crisis
Consumer buying behaviours is very importance in the industry because consumers will make many buying decisions every day. There are many consumer buying decisions in great detail to answer questions about what consumers buy, where they buy, how and how much they buy, when they buy, and why they buy. Marketers can study actual consumer purchases to find out what they buy, where, and how much.
References for Virgin and Qantas Airlines in Crisis
BBC News., ( 2014). "Qantas reports record annual loss" 5(5),25-26
Butler, Ben .,(2020). "Airlines in crisis: Virgin and Qantas under pressure as government hints at support package". The Guardian.
Clemons E., (2008). How Information Changes Consumer Behavior and How Consumer Behavior
David Marsden.,2001 Deconstructing consumer behaviour: theory and practice.1st ed. 9-21.
Eric K Clemons.,(2014).2nd ed .Determines Corporate Strategy. Journal of Management Information Systems, 25(2), 13-40.
Gilly, Mary C.; Gelb, Betsy D., (1982). "Post-Purchase Consumer Processes and the Complaining Consumer". Journal of Consumer Research.
Kakkor, P.,(1976), "Inert Set or Inferred Set: A Comment, Journal of Marketing , 59-60
Kotler and Keller., (2006). Model of consumer's behaviour .12 th edition, New Jersey, Pearson Prentice Hall, p. 184
Noel, H., (2009). Consumer Behaviour. Lausanne, Switzerland: AVA Academia
Qantas Airways Limited,.(2016). QANTAS ANNUAL REVIEW 2015. SOCIAL RESPONSIBILITY & GOVERNANCE. QANTAS.1-6.
Solomon, M., Bamossy, G. J., Askegaard, S., & Hogg, M. K., (2006). Consumer Behaviour: A European Perspective .3rd Edition. Prentice Hall.
The Australian., (2015). "Qantas International's market share slips as capacity growth slows". 86-88
Tyagi, C. and Kumar, A., (2004). Consumer Behaviour. New Delhi: Atlantic publishers and distributors, p.50.
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